Net income for the three months ended June 30, 2017 was $7.2 million, or
$0.04 per share, compared to a net loss of $46.9 million, or $0.40 per
share, for the three months ended June 30, 2016.

Operational Update

Delaware Basin

In Ward County, Texas, the Caprito 98-201H and Caprito 98-301HR were
successfully fracture stimulated and are currently flowing back at very
encouraging rates. Abraxas is flowing both wells back using a more
conservative choke management protocol after observing the practices of
offsetting operators. The objective of this protocol is to enhance the
performance and ultimate recovery from the well. To date the performance
of these wells is exceeding that of the Company’s first Wolfcamp A2
completion in the Caprito 99-302H. Furthermore, the performance of the
Company’s first Wolfcamp A1 test in the Caprito 98-201H is exceeding
that of the two Wolfcamp A2 completions in the Caprito 98-301HR and
Caprito 99-302H. Abraxas will furnish 30-day IP rates when they are
available. Following the acquisition of additional working interests at
Caprito (expected to close in August 2017), Abraxas estimates it will
own a working interest of approximately 98% in the Caprito 98-201H and
98-301HR.

Abraxas successfully drilled and cased the Caprito 83-304H and Caprito
83-404H to total depths of 16,387 and 16,590 feet, respectively. The
Caprito 83-304H is targeting the Wolfcamp A2 zone and the Caprito
83-404H is targeting the Wolfcamp B zone. Completion of these wells is
scheduled for September 2017. Following the acquisition of additional
working interests at Caprito (expected to close in August 2017), Abraxas
estimates it will own a working interest of approximately 100% in the
Caprito 83-304H and Caprito 83-404H.

Abraxas recently spud the Caprito 82-101H and Caprito 82-202H. The
Caprito 82-101H is targeting the Third Bone Spring zone and the Caprito
82-202H is targeting the Wolfcamp A1 zone. Abraxas estimates it owns a
working interest of approximately 62% and 100% in the Caprito 82-101H
and Caprito 82-202H, respectively.

Williston Basin

At Abraxas’ North Fork prospect, in McKenzie County, North Dakota, the
Stenehjem 6H and 8H wells targeting the Three Forks averaged 1,143 Boepd
(861 barrels of oil per day, 1,692 Mcf of natural gas per day) (1)
over their first 30 days of production. The Stenehjem 7H and 9H wells
targeting the Middle Bakken averaged 1,148 Boepd (854 barrels of oil per
day, 1,761 Mcf of natural gas per day) (1) over their first
30 days of production. Abraxas owns a working interest of approximately
75% in the Stenehjem 6H-9H.

The Yellowstone 2H-4H wells, in which Abraxas owns a 52% working
interest, are now scheduled for an October 2017 completion.

Eagle Ford/Austin Chalk

In Atascosa County, Texas, the Shut Eye 1H, in which Abraxas owns a 100%
working interest, is now scheduled for a September 2017 completion.

Delaware Basin Acquisition

Abraxas is on schedule to close the Company’s Delaware Basin acquisition
announced July 13, 2017. After adjustments for title defects Abraxas
will be exchanging $3.2 million in cash, 2.0 million shares of Abraxas
Petroleum Common Stock, Abraxas’ Pecos County Ranch and ½ Abraxas’ owned
minerals under the ranch for 918 net mineral acres (798 net mineral
acres with Bone Spring and Wolfcamp rights) and 130 Boepd of production
in Ward, Reeves, Winkler and Pecos Counties, Texas.

Second Quarter Production

Production for the second quarter of 2017 averaged approximately 5,172
Boepd (2,873 barrels of oil per day, 7,817 Mcf of natural gas per day,
996 barrels of NGL per day). Production was adversely impacted by
downtime in the Bakken associated with shutting in wells due to the
Stenehjem 6H-9H completions and curtailed volumes in South Texas and the
Permian Basin.

Guidance Update

Despite Abraxas’ adoption of a controlled flowback protocol on the
recent Caprito completions, current production is averaging over 9,000
Boepd. As these two wells ramp up to expected levels, Abraxas expects to
meet or exceed the Company’s originally forecasted 2017 exit rate of
9,500 Boepd in the coming weeks. Abraxas is adjusting the Company’s
target exit rate to approximately 10,750 Boepd. Abraxas is adjusting
guidance for 2017 to account for the Company’s current planned
completion schedule and well performance.

Abraxas is also providing 2018 and 2019 production and Capital
Expenditure guidance for the first time. The 2018 and 2019 guidance
assumes a two-rig program, with one rig operating in the Bakken/Three
Forks on the Company’s current development plan and a second rig
operating on the Company’s Ward County assets. The 2018 and 2019 Capital
Expenditure guidance provided below assumes current wells costs and
working interests. The guidance assumes a one rig Wolfcamp program will
result in the drilling and completion of eight to nine gross wells per
year on the Company’s Ward County assets. Management expects increased
drilling efficiencies to drive the ultimate number of wells drilled and
completed per year higher. This guidance does not assume any additional
acquisitions or divestitures or activity on any other assets.

The 2017, 2018 and 2019 capital expenditure budget is subject to change
depending upon a number of factors, including the availability of
drilling equipment and personnel, economic and industry conditions at
the time of drilling, prevailing and anticipated prices for oil and gas,
the availability of sufficient capital resources for drilling prospects,
the Company’s financial results, the availability of leases on
reasonable terms and the ability of the Company to obtain permits for
drilling locations.

2017E

2018E

2019E

Low

High

Production

Total (Boepd)

7,800

8,200

11,500

12,750

% Oil

61%

68%

69%

% NGL

16%

13%

11%

% Natural Gas

23%

19%

20%

CAPEX ($mm)

$120 (2)

$90

$90

Exit Rate (Boepd)

10,750

Comments

Bob Watson, President and CEO of Abraxas, commented, “As expected,
second quarter 2017 volumes dipped due to well shut-ins in the Bakken
from offsetting completions. Unfortunately, we were also plagued by gas
curtailments in South Texas and in the Permian, which negatively
impacted the quarter. With the past now behind us, we expect to approach
our anticipated year-end exit rate in the next few weeks. This bodes for
a much stronger than anticipated second half 2017 production outlook as
evidenced by our increased anticipated exit rate to 10,750 Boepd.

“We are pleased to have uncovered a deep inventory of high rate of
return wells on our Ward County assets. This, alongside our always
predictable Bakken/Three Forks development, gives us comfort to provide
the street with a more detailed picture of what we forecast internally
at Abraxas with just a two-rig drilling program and assuming current
efficiencies. These projections obviously will put us in a position to
maintain a strong balance sheet and remain acquisitive. Our focus
remains on continuing to expand our Delaware position to meaningful
scale on attractive terms as we have demonstrated to date.

“Since January 2017, we added over 2,500 core Wolfcamp/Bone Spring acres
in the Delaware Basin at a reasonable cost. We divested several non-core
assets and will continue to streamline this portfolio heading forward.
We also achieved our goal of building our production base to a critical
mass by year end four months ahead of expectations. Most importantly, we
accomplished all of this while maintaining a best in class balance
sheet. I couldn’t be more proud of our team and we look forward to
continuing to execute on our stated 2017 goals.”

(1) The 30-day average rates represent the highest 30 days of
production and do not include the impact of natural gas liquids and
shrinkage at the processing plant and include flared gas.

(2) Includes $110 million in cash and $10 million in shares and
Abraxas’ Coyanosa Draw ranch used as consideration in August 2017 Ward
County acquisition.

Conference Call

Abraxas Petroleum Corporation (NASDAQ:AXAS) will host its second quarter
2017 earnings conference call at 11 AM ET on August 9, 2017. To
participate in the conference call, please dial 844.778.4143 and enter
the passcode 54295695. Additionally, a live listen only webcast of the
conference call can be accessed under the investor relations section of
the Abraxas website at www.abraxaspetroleum.com.
A replay of the conference call will be available through September 6,
2017 by dialing 855.859.2056 and entering the passcode 54295695 or can
be accessed under the investor relations section of the Abraxas website.

Abraxas Petroleum Corporation is a San Antonio based crude oil and
natural gas exploration and production company with operations across
the Permian Basin, Rocky Mountain, and South Texas regions of the United
States.

Safe Harbor for forward-looking statements: Statements in this release
looking forward in time involve known and unknown risks and
uncertainties, which may cause Abraxas’ actual results in future periods
to be materially different from any future performance suggested in this
release. Such factors may include, but may not be necessarily limited
to, changes in the prices received by Abraxas for crude oil and natural
gas. In addition, Abraxas’ future crude oil and natural gas production
is highly dependent upon Abraxas’ level of success in acquiring or
finding additional reserves. Further, Abraxas operates in an industry
sector where the value of securities is highly volatile and may be
influenced by economic and other factors beyond Abraxas’ control. In the
context of forward-looking information provided for in this release,
reference is made to the discussion of risk factors detailed in Abraxas’
filings with the Securities and Exchange Commission during the past 12
months.

General and administrative, excluding stock-based compensation ($
per Boe)

$

4.08

$

4.31

$

3.58

$

3.90

Cash interest ($ per Boe)

0.83

2.28

0.72

2.16

Depreciation, depletion and amortization ($ per Boe)

9.38

12.76

9.02

11.76

(a) See reconciliation of non-GAAP financial measures below.

BALANCE SHEET DATA

(In thousands)

June 30, 2017

December 31, 2016

Cash

$

652

$

—

Working capital

(19,474

)

(7,178

)

Property and equipment – net

165,905

136,311

Total assets

187,137

161,648

Long-term debt

34,487

96,616

Stockholders’ equity

106,362

18,505

Common shares outstanding

163,850

135,094

Working capital per bank loan covenants (a)

(23,621

)

(4,064

)

(a)

Excludes current maturities of long-term debt and current derivative
assets and liabilities in accordance with our bank loan covenants.

ABRAXAS PETROLEUM CORPORATION CONSOLIDATED

STATEMENTS OF OPERATIONS

(In thousands except per share data)

Three Months EndedJune 30,

Six Months EndedJune 30,

2017

2016

2017

2016

Revenues:

Oil and gas production

$

13,136

$

11,004

$

31,923

$

20,545

Other

16

4

31

27

13,152

11,008

31,954

20,572

Operating costs and expenses:

Lease operating

3,421

4,259

7,539

9,010

Production and ad valorem taxes

1,158

1,227

2,778

2,402

Rig expense

—

263

—

342

Depreciation, depletion, and amortization

4,415

5,669

9,789

11,561

Impairment

—

28,735

—

63,820

General and administrative (including stock-based compensation of
$979, $835, $1,749, and $1,643 respectively)

2,898

2,753

5,635

5,478

11,892

42,906

25,741

92,613

Operating income (loss)

1,260

(31,898

)

6,213

(72,041

)

Other (income) expense:

Interest income

(1

)

(1

)

(1

)

(1

)

Interest expense

501

1,152

1,008

2,390

Amortization of deferred financing fees

117

448

254

612

(Gain) loss on derivative contracts

(6,450

)

13,440

(15,831

)

12,775

(Gain) on sale of non-oil and gas assets

(102

)

—

(102

)

—

(5,935

)

15,039

(14,672

)

15,776

Income (loss) before income tax

7,195

(46,937

)

20,885

(87,817

)

Income tax benefit

—

—

—

—

Net income (loss)

$

7,195

$

(46,937

)

$

20,885

$

(87,817

)

Net income (loss) per common share - basic

$

0.04

$

(0.40

)

$

0.13

$

(0.80

)

Net income (loss) per common share - diluted

$

0.04

$

(0.40

)

$

0.13

$

(0.80

)

Weighted average shares outstanding:

Basic

162,357

116,120

158,259

110,415

Diluted

163,805

116,120

159,942

110,415

ABRAXAS PETROLEUM CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

To fully assess Abraxas’ operating results, management believes that,
although not prescribed under generally accepted accounting principles
("GAAP") in the United States of America, EBITDA is an appropriate
measure of Abraxas' ability to satisfy capital expenditure obligations
and working capital requirements. EBITDA is a non-GAAP financial measure
as defined under SEC rules. EBITDA should not be considered in isolation
or as a substitute for other financial measurements prepared in
accordance with GAAP or as a measure of the Company's profitability or
liquidity. EBITDA excludes some, but not all items that affect net
income and may vary among companies. The EBITDA presented below may not
be comparable to similarly titled measures of other companies.

EBITDA is defined as net income (loss) plus interest expense, deferred
income taxes, depreciation, depletion and amortization expenses,
impairments, unrealized gains and losses on derivative contracts, and
stock-based compensation. The following table provides a reconciliation
of EBITDA to net income (loss) for the periods presented.

We have also disclosed Adjusted EBITDA per bank loan covenants. Adjusted
EBITDA per bank loan covenants is a non-GAAP financial measure as
defined under SEC rules. Our management believes that information
regarding Adjusted EBITDA per bank loan covenants is material to an
understanding of our financial condition and liquidity. Adjusted EBITDA
per bank loan covenants should not be considered in isolation or as a
substitute for other financial measurements prepared in accordance with
GAAP or as a measure of the Company's profitability or liquidity.
Adjusted EBITDA per bank loan covenants presented below may not be
comparable to similarly titled measures of other companies.

(In thousands)

Three Months EndedJune 30,

Six Months EndedJune 30,

2017

2016

2017

2016

Net income (loss)

$

7,195

$

(46,937

)

$

20,885

$

(87,817

)

Net interest expense

500

1,151

1,007

2,389

Depreciation, depletion and amortization

4,415

5,669

9,789

11,561

Amortization of deferred financing fees

117

448

254

612

Impairment

—

28,735

—

63,820

Stock-based compensation

979

835

1,749

1,643

Unrealized (gain) loss on derivative contracts

(5,071

)

12,374

(13,831

)

17,017

EBITDA

$

8,135

$

2,275

$

19,853

$

9,225

EBITDA

$

8,135

$

2,275

$

19,853

$

9,225

Realized loss on derivative monetization

—

(100

)

—

349

Monetized derivative contracts

—

10,010

—

14,370

Expenses related to equity offering/loan amendments

703

1,666

4,493

1,666

Adjusted EBITDA per bank loan covenants

$

8,838

$

13,851

$

24,346

$

25,610

This release also includes a discussion of “adjusted net loss, excluding
certain non-cash items,” which is also a non-GAAP financial measure as
defined under SEC rules. The following table provides a reconciliation
of adjusted net income (loss), excluding ceiling test impairment and
unrealized changes in derivative contracts. Management believes that net
income (loss) calculated in accordance with GAAP is the most directly
comparable measure to adjusted net income (loss), excluding certain
non-cash items. The calculation of adjusted net income (loss), excluding
certain non cash items presented below may not be comparable to
similarly titled measures of other companies.

Unrealized gains or losses on derivative contracts are based on
mark-to-market valuations which are non-cash in nature and may fluctuate
drastically from period to period. As commodity prices fluctuate, these
derivative contracts are valued against current market prices at the end
of each reporting period in accordance with Accounting Standards
Codification 815: Derivatives and Hedging as amended and
interpreted, which requires Abraxas to record an unrealized gain or loss
based on the calculated value difference from the previous period-end
valuation. For example, NYMEX oil prices on June 30, 2016 were $48.33
per barrel compared to $46.04 on June 30, 2017; therefore, the
mark-to-market valuation changed considerably from period to period.

Liquidity is calculated by adding the net funds available under our
revolving credit facility and cash and cash equivalents. We use
liquidity as an indicator of the Company's ability to fund development
and exploration activities. However, this measurement has limitations.
This measurement can vary from year-to-year for the Company and can vary
among companies based on what is or is not included in the measurement
on a company's financial statements. This measurement is provided in
addition to, and not as an alternative for, and should be read in
conjunction with, the information contained in our financial statements
prepared in accordance with GAAP (including the notes), included in our
SEC filings and posted on our website.